EUR/USD – Slight Gains Ahead of US Housing Data

EUR/USD has started the week with slight gains, as the pair trades in the mid-1.22 range in Monday’s European session. The euro had an awful week, losing about 200 points. EUR/USD is trading at its lowest level since July 2012. On the release front, German Import Prices posted a decline of 0.8%. Later in the day, Eurozone Consumer Confidence will be released. In the US, today’s only event is Existing Homes. The markets are expecting the indicator to soften in November, with an estimate of 5.21 million.

Recent releases out of Germany, the Eurozone’s largest economy, have been cause for optimism. The January forecast for German Consumer Climate came in at 9.0 points, a notch above the estimate of 8.9 points. This marked the fourth straight rise for the indicator, pointing to stronger optimism from consumers as we head into the New Year. These strong numbers come on the heels of German Business Climate, which improved to 105.5 points, up from 104.4 a month earlier. This edged above the forecast of 105.4 points. On the inflation front, German PPI, which tracks manufacturing inflation, improved to 0.0% in November, up from -0.2% a month earlier. Like the consumer confidence indicator, this release is on an upward trend. Strong German consumer and business confidence numbers are welcome news, as the Eurozone economy continues to struggle.

The shaky euro took a tumble last week, reacting sharply to the Federal Reserve policy statement. Previous Fed policy statements have usually stated that the Fed would maintain low rates for a “considerable time”, but the December statement changed terminology, saying the Fed would be “patient” before raising rates. In a follow-press conference, Federal Reserve chair Janet Yellen was less ambiguous, saying that the Fed was unlikely to raise rates for the “next couple of meetings”. The markets took this to mean that a rate hike is in the works, although most likely not before April. The news of a likely US rate hike in 2015 sent the euro sprawling, as the currency lost about 170 points on Wednesday and finds itself at 2.5 year lows against the surging US dollar.

EUR/USD for Monday, December 22, 2014

EUR/USD December 22 at 11:05 GMT

EUR/USD 1.2264 H: 1.2274 L: 1.2222

EUR/USD Technical

S1

S2

S1

R1

R2

R3

1.1926

1.2042

1.2143

1.2286

1.2407

1.2518

EUR/USD has edged higher in the Asian and European sessions.

1.2143 is a strong support level.

1.2286 is a weak resistance line. 1.2407 is stronger.

Current range: 1.2143 to 1.2286

Further levels in both directions:

Below: 1.2143, 1.2042, 119.26 and 118.02

Above: 1.2286, 1.2407, 1.2518, 1.2688 and 1.2806

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in long positions on Monday. This is not consistent with the pair’s movement, as the euro has posted slight gains. The ratio has a majority of long positions, indicative of trader bias towards the euro continuing to move to higher ground.

EUR/USD Fundamentals

7:00 GfK German Import Prices. Actual -0.8%.

15:00 Eurozone Consumer Confidence. Estimate -11 points.

15:00 US Existing Home Sales. Estimate 5.21M.

* Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.

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